A new lease of life for renters

October 26, 2017 — 7.31pm

The conversation about housing affordability has tended to focus on young people struggling in an overheated property market to realise the Australian dream of home ownership. And rightly so. But the debate has tended to ignore the rights and needs of those who rent. This is finally changing.

Victorian Premier Daniel Andrews was first cab off the rank earlier this month, announcing a raft of reforms designed to bolster the rights of renters. They range from things that are relatively minor but enhance the enjoyment of renters in their homes – such as the right to keep a pet, or hang pictures on the living-room wall – to things that go to the very essence of the leasing relationship. These include a ban on agents or landlords requiring prospective tenants to "bid" for a lease, along with rules against evicting a tenant without valid reason.

Market-based help may be on the way in the form of built-to-rent developments. Credit:Louise Kennerley

This week, the Labor opposition in NSW followed suit and announced important changes it would introduce in government. Along with an end to unreasonable evictions and limits on the frequency of rent reviews, Labor would introduce the option of five-year tenancies, while making 12 months the minimum. This would help ease one of the major anxieties of the long-term renter, which is security.

NSW Better Regulation Minister Matt Kean was next to the table, revealing the government was working on a comprehensive package that would "make life fairer and better for renters in NSW". Along with much of the above, those changes ensure tenants aren't kept waiting needlessly when repairs and maintenance are required.

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It is no coincidence that the discussion of renters' rights has begun in Melbourne and Sydney, which for the same reason are the focus in the housing affordability debate. These are the two hottest property markets in the country, by a long shot. That forces many young people to rent, sometimes for years, while they save for a deposit on a home. It inclines others to opt out of the housing market altogether, figuring they will get better value out of renting than by slaving for decades to pay off a hefty mortgage, especially if the foreshadowed "correction" to the property market arrives.

Market-based help may also be on the way for renters, in the form of built-to-rent developments. This is one of the hottest parts of the property market in the US, and provides housing that is specifically tailored to the needs of renters. The owners of these properties have a service mentality towards their tenants. Local developers are showing an interest.

A generation ago, barely one-quarter of Australians rented, while more than 40 per cent owned their homes outright. Now, both groups constitute about one-third of the market. So renters form a larger and more powerful cohort than ever before. While there is no evidence of the emergence of a new breed of slum landlord in Sydney, tight markets can lead to unscrupulous practices and these should be outlawed.

Of course, the danger is that too heavy-handed an approach by government can harm those it seeks to assist. For example, enabling the option of longer-term leases is fine; mandating them risks being the kind of thing that could drive investors to other asset classes, further tightening the rental market. Still, the rights of renters can be enhanced without slugging landlords who do the right thing.